"In a world that has begun to believe that financial profit is the only religion, sometimes not wanting money is more frightening to capitalist society than acts of terrorism."
Arundhati Ray

24 March 2008

Lump in your stocking

Coal crisis hits economies from South Africa to Japan

Long considered an abundant, reliable and relatively cheap source of energy, coal is suddenly in short supply and high demand worldwide. An untimely confluence of bad weather, flawed energy policies, low stockpiles and voracious growth in Asia's appetite has driven international spot prices of coal up by 50% or more in the past five months, surpassing the escalation in oil prices. The signs of a coal crisis have been showing up from mine mouths to factory gates and living rooms: As many as 45 ships were stacked up in Australian ports waiting for coal deliveries slowed by torrential rains. China and Vietnam, which have thrived by sending goods abroad, abruptly banned coal exports, while India's import demands are up. Factory hours have been shortened in parts of China, and blackouts have rippled across South Africa and Indonesia's most populous island, Java. Meanwhile, mining companies are enjoying a windfall. Freight cars in Appalachia are brimming with coal for export, and old coal mines in Japan have been reopened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fueling inflation.

Big swings in the prices of coal and other commodities are common. But while the price of coal has slipped slightly in recent weeks, many analysts and companies are wondering whether high prices are here to stay. As increasing numbers of the world's poor join the middle classes, hooking up to electricity grids and buying up more manufactured goods, demand for coal grows. World consumption of coal has grown 30% in the past six years, twice as much as any other energy source. About two-thirds of the fuel supplies electricity plants, and just under a third heads to industrial users, mostly steel and concrete makers. Coal -- a fuel from the era and pages of Charles Dickens -- is almost always dirtier to burn than are other fossil fuels. Although its use accounts for a quarter of world energy consumption, it generates 39% of energy-related carbon dioxide emissions. Climate change concerns could lead to legislation in many countries imposing higher costs on those who burn coal, forcing utilities and factories to become more efficient and curtail its use. Climatologists warn that without technology to capture and store carbon dioxide emissions, burning more coal would be disastrous. Developing countries aren't the only ones using more coal. Throughout the 1980s and 1990s, British coal consumption declined as new sources of oil and natural gas were discovered in the North Sea. However, the trend has reversed and coal consumption has climbed steadily over the past six years, including a 9% jump from 2005 to 2006. Coal has now surpassed gas once again as the leading fuel for electricity plants. However, the British mines that George Orwell described 70 years ago as "like my own mental picture of hell" are much smaller than they once were. Mine production capacity declined during the '80s and '90s "dash for gas." Now Britain imports coal from Russia, Australia, Colombia, South Africa and Indonesia. (Calgary Herald 080322, Vancouver Sun 080324)

Everything's gone insane. Suddenly, the paradigm shift hits like a ton of coal.